As the Deputy will be aware, upon withdrawal from the EU and in the absence of a political agreement between the EU and the UK, UK (including Gibraltar) insurance undertakings, including life insurance undertakings, and insurance distributors will lose their right to conduct business by way of Freedom of Establishment (FOE) and Freedom of Services (FOS) under the EU regulatory framework. According to the European Insurance and Occupational Pensions Authority’s (EIOPA) Opinion of 28 June 2018, insurance contracts concluded before the Withdrawal date by UK undertakings by way of FOE or FOS are in principle valid after that date. What has been in doubt however is the ability of insurance undertakings and insurance distributors (i.e. brokers) to continue performing certain obligations and activities and ensure service continuity with regard to such contracts, e.g. pay out claims.
The key response by European and domestic regulatory authorities has been to instruct insurance firms impacted by Brexit to make and implement contingency plans to ensure that they can continue to provide services to their EU customers post-Brexit. In this regard, the Central Bank has been working closely with the regulatory authorities in the UK as well as impacted insurance undertakings from the UK to ensure that they have appropriate contingency plans in place to allow them to continue to service existing contracts in Ireland. It is understood that a significant majority of UK/Gibraltar insurance undertakings have prepared appropriate Brexit contingency plans which are expected to be implemented in advance of Brexit. However, there was a legitimate concern, that a small number of such undertakings as well as a number of insurance distributors will either not have completed such contingency plans by the date of Brexit, or had made a decision not to implement them in the first place. Such a scenario as you will appreciate gives rise to a risk in respect of their ability to continue servicing the insurance policies they have sold, in the event of a no-deal Brexit.
The Government has dealt with this small number of undertakings through the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019, which was enacted earlier this year. This legislation allows any UK/Gibraltar-authorised insurance entity to continue the administration of both life and non-life insurance policies written in Ireland after Brexit. This “run-off” regime applies even in the event of a no-deal Brexit and for a maximum period of three years from the date of Brexit. It should be noted that, under this regime, no new policies or renewals are allowed to be written by UK-authorised insurers after a no-deal Brexit unless they receive authorisation from an EU/EEA member state (including Ireland).
I would urge any consumer that has concerns about their life insurance policy to contact their insurance provider, who should be able to provide them with details of their arrangements to ensure continuity of service. This includes whether the consumer can amend policies, or how the company will pay claims associated with policies, written prior to Brexit.
Finally, I would note that the UK’s Financial Conduct Authority, in a recent speech, reaffirmed their commitment to prioritising consumer protection in financial services. The FCA has stated that UK insurers should pay claims on existing policies wherever the policyholder happens to be located. I welcome this commitment and would expect that relevant insurers would honour policies written to Irish consumers.